UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 14, 2019
Date of Report (Date of earliest event reported)
Canbiola, Inc.
(Exact name of registrant as specified in its charter)
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Florida
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333-208293
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20-3624118
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.
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960 South Broadway, Suite 120
Hicksville, NY
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11801
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code
516-205-4751
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (
see
General Instruction A.2. below):
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Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company X
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 8.01 Other Events
On January 14, 2019, DuraMed, Inc. (“DuraMed”), a wholly-owned subsidiary of Canbiola, Inc. (the “Company” or “CANB”), entered into a Memorandum of Understanding (the “MOU”) with Sam International (“Sam”) and ZetrOZ Systems LLC (“ZetrOZ” and, collectively with Sam, the “Manufacturers”). Pursuant to the MOU, the Manufacturers granted DuraMed the exclusive right to distribute (the “Distribution License”) sam® Pro 2.0 (SA271) and sam® Gel Coupling Patches (UB-14-72) (collectively, the “Products”) within the United States for the Personal Injury Protection/No Fault Market during the term of the MOU. DuraMed agreed to purchase from the Manufactures on a monthly basis no fewer than the number of units of sam® Pro 2.0 (“Units”) indicated below (each, a “Monthly Minimum Order”):
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Time Period
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# of Units
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January, 2019
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100
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February, 2019
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110
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March, 2019
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120
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April, 2019
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130
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May, 2019
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140
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June through
December, 2019
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150
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Year 2020
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160
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Year 2021
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175
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The price of each Unit will be $2,447. The exclusivity of the Distribution License granted to DuraMed under the MOU is dependent upon meeting the Monthly Minimum Orders. In addition, DuraMed was granted the right to distribute sam® Gel Capture Patches (UB-14-24). DuraMed will get rebates of 2%-3% based on the volume of Products sold by it.
The Manufacturers agreed to provide DuraMed with photos, logos, brochures, protocols, and other marketing materials for the Products and granted DuraMed a license to use the same in connection with promoting the Products.
The initial term of the MOU expires December 31, 2019 (the “Initial Term”). The agreement contemplated by the MOU will automatically renew for additional one-year terms at the end of each calendar year,
provided
the Monthly Minimum Orders are met. The MOU otherwise contains standard terms and conditions.
The foregoing discussion is for summary purposes only and is qualified in its entirety by the actual terms of the MOU, which is included herewith as an Exhibit.
The Licensors also provided DuraMed with a Manufacture’s Opinion Letter (the “Opinion Letter”) which includes a cost benefit analysis for the Products. Based on the information contained in the Opinion Letter, DuraMed anticipates renting the Units to patients at a rate of $59.42 per day for each Unit. The Opinion Letter has been included as an Exhibit hereto and is not binding on the Company, DuraMed or the Manufacturers and is meant for illustrative purposes only. The Opinion Letter shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
Forward-Looking Statements
Statements contained in this current report that are not statements of historical fact are intended to be and are hereby identified as “forward-looking statements” for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. The Company undertakes no obligation to update or revise this current report to reflect future developments except as otherwise required by the Securities Exchange Act of 1934.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed herewith.
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Exhibit No.
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Description
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10.1
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Memorandum of Understanding between DuraMed, Sam, and ZetrOZ
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10.2
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Manufacture’s Opinion Letter
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Canbiola, Inc.
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Date: January 30, 2019
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By:
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/s/ Marco Alfonsi
________
Marco Alfonsi, CEO
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![[EXHIBIT1012.GIF]](https://content.edgar-online.com/edgar_conv_img/2019/01/30/0001511164-19-000026_EXHIBIT1012.GIF)
DURAMED INC. January 10, 2019
960 South Broadway
Suite 120
Hicksville, NY 11801
Attn: Stan Teeple
Re:
sam
®
Pro 2.0 Exclusivity in the United States PIP/No Fault market for 2019
The following is a Memorandum of Understanding between Sam International (CCRX), ZetrOZ Systems LLC, and Duramed Inc. (COMPANY) for the EXCLUSIVE distribution of sam® Pro 2.0 (SA271) in the United States for the PIP/No Fault Market, in accordance with the following terms and conditions:
1.
The exclusivity for COMPANY to distribute sam
®
Pro 2.0 (SA271) and sam
®
Gel Coupling Patches (UB-14-72) shall extend from January 2019 thru December 2019; provided the following minimum purchase quantities are met:
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Calendar Month
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sam
®
Pro 2.0
Unit Order Volume
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sam
®
Pro 2.0 Unit Price (US$)
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Jan 2019
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100
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$2,447
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Feb 2019
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110
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$2,447
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March 2019
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120
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$2,447
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April 2019
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130
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$2,447
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May 2019
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140
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$2,447
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June 2019
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150
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$2,447
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July 2019
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150
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$2,447
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Aug 2019
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150
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$2,447
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Sept 2019
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150
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$2,447
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Oct 2019
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150
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$2,447
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Nov 2019
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150
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$2,447
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Dec 2019
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150
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$2,447
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2019 Annual
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1,650
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2.
There are no minimum monthly order volumes for the packs of sam
®
Gel Capture Patches (UB-14-24)
Bulk Pricing for sam
®
Gel Capture Patches (UB-14-24):
monthly Packs of Gel Capture Patches shall have the following discount price schedule on monthly orders/shipments:
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1 – 299 Packs: US$ 107.50/Pack
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300 - 599 Packs: US$ 103.50/Pack
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600 & UP Packs: US$ 99.50/Pack
3.
Payments Terms to Sam International/CCRX are 100% at time of shipment (FOB: Trumbull, CT)
![[EXHIBIT1014.GIF]](https://content.edgar-online.com/edgar_conv_img/2019/01/30/0001511164-19-000026_EXHIBIT1014.GIF)
4.
Volume Rebate Schedule:
Tiers
Rebate %
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$750,000 - $1,500,000
2%
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$1,500,001 – uncapped
3%
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Rebate to be paid annually from dollar specified based upon attainment of the purchase goals listed above.
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Payment to be made by check by:
February 1, 2020
5.
ZetrOZ will provide and permit COMPANY to use all Product Marketing Material; including but not limited to Product Photos, Model Placement Photo Protocols, Logos, Brochures....to promote sam
®
Pro 2.0
6.
This agreement will automatically renew at the end of each calendar year if minimum quantities are met.
7.
Monthly minimum orders after year one will be 160 per month in 2020 and 175 per month in 2021.
Agreed and accepted by mutual parties for Exclusivity in The United States PIP/No Fault market (less limited existing distributors); signatures below:
___________________________________ (Date)
President
Duramed Inc.
___________________________________
James M. Morton
President |
Sam International
Client Care Rx. Inc.
___________________________________
James S. Molinaro
Chief Commercial Officer
ZetrOZ Systems LLC
SAM INTERNATIONAL PO BOX 583 JAMISON PA. 18929 [P] 215.601.3158 [F] 855.640.1946
![[EXHIBIT1022.GIF]](https://content.edgar-online.com/edgar_conv_img/2019/01/30/0001511164-19-000026_EXHIBIT1022.GIF)
Manufacture’s Opinion Letter
Date:
August 2018
To:
sam® Distributors
From:
James S. Molinaro,
Chief Commercial Officer
Re:
sam® Pro 2.0 Rentals - Consumable and Replacement Costs
For distributors who are renting the sam® Professional units through Insurance Claims; the following are our guidelines based upon our experience with renting the sam® device to multiple patients.
1.0
BASE UNIT COST and WARRANTY
1.1
Base sam® Pro 2.0 Unit Price to the Distributor (SA271):
$2,822
1.2
Base Unit Includes:
sam® Pro 2.0 Unit with Dual Applicator/Transducer and Charger
1.3
Warranty:
12-months or 9 Rentals on Applicators/Transducers from Date of Shipment from Factory
2.0
CONSUMABLE ITEMS; Including Damage and Loss
2.1
sam® Gel Capture Patches (UB-14-24):
$120/Pack (24-pcs per Pack); 2-Pcs per Day
2.2
sam® Power Controller:
replacement or loss after 4-rentals; $230/unit
2.3
sam® Applicator:
WC patients accidentally throw the Applicators away with the Coupling Patch; our opinion is this will happen at least two-times during a 12-month rental usage; 2-Applicators per sam® Professional Unit: $295/Applicator
2.
4
sam® 2-Oz Tube of Gel (S1007-AC):
issued with each Patient Rental; $6/Tube
2.
5
sam® Y-Adaptor (S1003-AC):
WC patients accidentally break the Y-Cable when removing the Applicators; our opinion is this will happen two happen at least three during the 12-month usage; 2-Applicators per sam® Professional Unit: $45/Y-Adaptor
2.6
sam® Charger (S1005-AC):
Typically, patients lose the Charger; would expect for this to happen at least twice per year; 2-Applicators per sam® Professional Unit: $75/Charge
www.samrecover.com | info@samrecover.com
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3.0
PATIENT DISPENSING, RETURNS and CLEANING COSTS
3.1
Delivery of sam® Professional Unit/Patches to Patient and Instructions of Use:
3.1.1
Travel Time (Nominal 30-miles RT):
30-miles x 0.575 = $17.25
3.1.2
Instruction of Use to Patient (30-60 minutes):
$75 Labor Cost
3.2
sam® Unit Return; Shipping Box + Pre-paid Postage:
$55/Patient Rental
3.3
Patient Follow-up Calls (2-weeks & 4-weeks):
$75 Labor Cost
3.3
sam® Unit Inspection and Clean-up:
3.3.1
Cleaning Supplies/Swabs:
$15/Patient Rental
3.1.2
Inspection, Clean-up and Re-Pack (30-60 minutes):
$75 Labor Cost
4.0
PATIENT RENTALS DURING 18-MONTHS
4.1
Minimum Patient Rental:
36-days
4.2
PATIENT DISPENSING, RETURNS and CLEANING COSTS:
5-days/Rental
4.3
MAXIMUM PATIENT RENTAL DURING 12-MONTHS:
10 Rentals
5.0
PATIENT NON-RETURNS and DENIED CLAIMS
5.1
Patient Non-returns:
Of the 10 Patients Renting the units it should be expected that at least 1-Patient will not return the sam® Pro 2.0 unit
5.2
Denied Claims or False Claim:
Of the 10 Patients renting the units it should be expected that at least 1-Patient submits a “false claim” or the claim is denied
5.3
Net Rentals per sam® Professional unit:
8-Rentals
www.samrecover.com | info@samrecover.com
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6.0
SUMMARY RENTAL DISTRIBUTOR COSTS:
12-month Usage (8-Patient Rentals)
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Description
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Item Number
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Qty.
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Unit Price
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Extended Price
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sam® Pro 2.0
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SA271
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1
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US$ 2,822.00
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$ 2,822.00
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sam® Gel Capture Patches PACKS (11-Rentals x 36-Days x 2 Patches/Day)
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UB-14-12
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24
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US$ 120.00
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$ 2,880.00
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sam® Sport Controller
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N/A
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2
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US$ 230.00
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$ 460.00
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sam® Sport Applicators
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N/A
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4
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US$ 295.00
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$ 1,080.00
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sam® 2-Oz Tube of Gel
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S1007-AC
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8
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US$ 6.00
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$ 48.00
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sam® Y-Adaptor
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S1003-AC
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2
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US$ 90.00
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$ 45.00
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sam® Charger
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S1005-AC
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2
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US$ 75.00
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$ 150.00
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sam® Delivery and Instruction for Use
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--
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8
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US$ 92.25
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$ 738.00
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sam® Unit Return, Shipping Box/Pre-Pay
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--
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8
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US$ 55.00
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$440.00
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sam® Inspection and Clean-up
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--
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8
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US$ 92.25
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$ 738.00
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Patient Non-returns
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SA271
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1
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US$ 2,822.00
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$ 2,822.00
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TOTAL
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7.0
SUGGESTED MONTHLY RENTALS TO PATIENTS
7.1
Total Estimated Distributor Costs for 8-Patient Rentals:
$ 12,223.00
7.2
Daily Cost per Patient
: $12,223.00/8-Patients x 36-days = $ 42.44/Day
7
.3
Recommended Cost/Day Rental to Patient:
(40% Mark-up) $ 59.42/Day
www.samrecover.com | info@samrecover.com
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